Defence Pension

General Bipin Rawat’s proposals to increase retirement age and slash pension benefits for armed forces face criticism

Print edition : January 15, 2021

General Bipin Rawat, Chief of Defence Staff, during the launch of the stealth frigate INS Himgiri in Kolkata on December 14. Photo: Swapan Mahapatra/PTI

The Department of Military Affairs’ new proposals to increase the retirement age of officers and lower the stipulated pension of officers opting for premature retirement to contain the booming pension bill has been widely criticised.

THE fastest growing component of India’s defence budget is the defence pension bill and not expenses on the procurement of military hardware. The Indian Army, with 1.3 million soldiers, is the world’s second largest armed forces and the only major fighting force in the world that keeps recruiting personnel instead of downsizing its strength.

According to the report of the Parliamentary Standing Committee on Defence (2019-20), the Government of India provides pension to approximately 32,35,730 retired defence personnel, of whom 26,33,947, or 81 per cent, are military pensioners, or their dependants, 6,01,783, or 19 per cent, are defence civilian pensioners or their dependants, and around 46,869 pensioners, or 1.4 per cent, are not classified in either category. To this burden, around 55,000 pensioners are added every year.

While the bulk of civilian pensioners are from the Ordnance Factory Board (OFB) and the Defence Research and Development Organisation (DRDO), military organisations such as the Military Engineer Services (MES), the Army Ordnance Corps (AOC), the Army Service Corps (ASC), the naval dockyards, the Base Repair Depots (BRD), equipment depots and army base workshops also contribute to the overall number of civilian pensioners. Besides these, as of 2020, about 73,700 personnel have superannuated from various defence establishments such as the Defence Accounts Department (DAD), the Borders Roads Organisation (BRO), the Jammu and Kashmir Light Infantry (JKLI) and the Coast Guard. Their pensionary benefits come from the Ministry of Finance’s civil defence pension budget. In short, the total number of defence pensioners is 33,09,430, accounting for more than half of all Central government pensioners (65,36,469).

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Although the initial increase in India’s defence pension bill was because of changes in the colour service of a vast majority of personnel below officer rank (PBOR) resulting in almost every retiree becoming eligible for a pension, implementation of the Sixth Central Pay Commission (CPC) in 2008 more than doubled the pension budget in a period of two years. The defence pension bill went up further with the Seventh Central Pay Commission recommendations in 2015 and the government decided in November 2015 to implement OROP (One Rank, One Pension) irrespective of the date of retirement. This resulted in a quantum increase of 46 per cent in pension expenditure in just a year.

The defence pension bill has more than doubled from Rs.55,000 crore in 2015 to Rs.1,33,825 crore in 2020-21 and is expected to go up by Rs.8,000 to 10,000 crore every year if the government implements its promise of revising defence pensions every five years. While the need to contain the steady rise in the defence pension bill cannot be emphasised enough, any methodology or means that is short-sighted, unimplementable, or affects the armed forces as a career option should be eschewed. A recent proposal of the Department of Military Affairs (DMA) to lower the stipulated pension of officers opting for premature retirement (PMR) appears to fall in this category. The DMA, which was established on January 1, 2020, functions under the aegis of the Ministry of Defence (MoD) and is headed by the Chief of Defence Staff (CDS) General Bipin Rawat. Gen. Rawat proposed a simultaneous increase in the retirement age for colonels (and equivalent ranks in the Indian Navy and the Indian Air Force) from 54 to 57 years, brigadiers from 56 to 58 and major generals from 58 to 59.

It is also proposed to increase the retirement age of the PBOR, the bulk of whom serve for a minimum of 15 years and are released depending on the rank and cadre vacancies in their stream and are compulsorily retired when they reach 35 years of age. The general opinion is that the PBOR of noncombat and specialised arms and services will be the biggest gainers of retirement age enhancement as these soldiers will now be able to serve until the age of 60. The Army will be able to better utilise this trained pool of personnel, who otherwise retired in their prime. The PBOR of combat arms will not gain as the Army needs younger and fitter men up front. Also, there will be no benefit for them on the pension front as they already come under the OROP scheme.

‘Untenable, ill-conceived’

While the proposal to increase the age of superannuation had some supporters, the proposal to slash the pension of officers who retire was greeted with derision, with both serving and retired officers calling it ludicrous, unimplementable and legally untenable, since it would mean changing/altering mid-stream the terms and conditions of service in the armed forces. Pensionary benefits, which are worked out “at 50 per cent of emolument or average of emoluments drawn during the last 10 months period preceding the date of retirement, whichever is beneficial”, actually attract many youths to join military service. A colonel retiring either prematurely (after completing 20 years of service) or on attaining superannuation will receive a monthly pension of around Rs.1 lakh for life.

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Said a serving Brigadier: “The proposal to reduce the pension of an officer who retires prematurely will amount to change of service conditions retrospectively, and, therefore, will not be legally tenable. Such proposals will have to be implemented prospectively. The CDS is wrong in saying that only ‘technically qualified personnel in the armed forces are unhappy’ with such proposals. The New Pension Scheme [NPS] should be the norm in the defence services as it is for the rest of the country.”

Lieutenant General N.B. Singh (Retd), former Director General of the Indian Army’s Corps of Electronics and Mechanical Engineers, said: “The CDS’ move on pensions is ill-conceived and against the law of the land. The Supreme Court has in several judgments reiterated that pension is not a bounty but a right for services rendered. You cannot have different service conditions for a homogenous group of people in government service. The move has not found support in the Defence Ministry. The age extension recommended for officers and men is a welcome step, though there is the fear that it will create an ageing army.”

A commodore posted at the naval headquarters described the twin proposals as “rubbish”. The officer, who recently moved out of a key human resource appointment, told Frontline: “Officers who haven’t made it to the next rank will naturally love it. Disenchanted and demotivated, they will sit back as guests of the government. This move will also put unnecessary pressure on commanding officers. It also flies in the face of making the armed forces a leaner and meaner machine. Being superseded is synonymous with the pyramidal structure of the armed forces, but the age extension will result in officers staying longer even without promotions, just to claim pension benefits. At least now the armed forces can say no to undeserving personnel getting re-employed. Automatic age extension will result in the armed forces becoming like any other government organisation.”

Premature retirement

Under the DMA’s proposal, officers seeking PMR after 20 to 25 years of service will receive only 50 per cent of the stipulated pension; those retiring after 26 to 30 years of service will get 60 per cent of pension; those retiring after 31 to 35 years of service will get 75 per cent of the entitled pension, and only those officers retiring after completing 35 years of full coloured service will receive the full pension. This move is clearly aimed at checkmating and penalising officers, especially the technically qualified specialists and super-specialists, who leave the service to seek a lucrative second career in the corporate world. The DMA proposal states: “The loss of such high-skilled manpower results in a void in the service skill matrix and is counterproductive.” However, many defence observers feel that the proposals go against the culture and ethos of the armed forces.

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Both the proposals fly in the face of the armed forces’ human resource policy, including its steep and narrow pyramidal promotion structure. Out of a course of around 100 commissioned officers, all officers become Lt Col. after completion of 13 years of service, but hardly 30 make it as a selection grade colonel. The number varies marginally from service to service, corps to corps, depending on factors such as number of vacancies. Out of the 30 colonels, less than a third make it to the rank of brigadier, with hardly two or three brigadiers then becoming a two-star major general or three-star lieutenant general. Many officers opine that they should be given an option to leave the forces after 5/10/12/15 years of service, “as and when it becomes super clear as to what the future holds for them”. Lt Gen. N.B. Singh voiced a broad swell of opinion when he said that the DMA was not considering organisational realities by advocating these proposals. He said: “Many of the officers who fail to make it to rank of colonel are around 35 to 37 years old, and with no prospects of future promotions. These officers cannot be expected to continue serving for another 18 to 20 years with no incentive. Premature retirement was intended to give these boys an easy way out.

The fact that, combat medics, pilots, combat engineers, signallers and other specialists are doing well after taking PMR, is not palatable to the CDS, as one can make out from his statements. The CDS must realise that nobody likes to change one’s profession midstream when family commitments are at maximum.”

Kargil panel recommendations

Why does the DMA want an ageing armed forces when the clarion call post Kargil conflict has been for an Army with a younger profile? The Kargil Review Committee (KRC) set up in 1999 under the chairmanship of K. Subrahmanyam had stated: “The Army must be young and fit at all times. Therefore, instead of the present practice of having 17 years of colour service (as has been the policy since 1976), it would be advisable to reduce the colour service to a period of seven to ten years and, thereafter, release these officers and men for service in the country’s paramilitary formations.

After an appropriate period of service here, older cadres might be further streamed into the regular police forces or absorbed in a National Service Corps (or a National Conservation Corps), as provided for under Article 51A(d) in the Constitution, to spearhead a range of land and water conservation and physical and social infrastructure development on the model of some eco-development battalions that have been raised with a fair measure of success. This would reduce the age profile of the Army and the paramilitary forces and reduce pension costs and other entitlements such as married quarters and educational facilities.”

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The KRC had suggested that the manpower requirement of the Army could be met through the paramilitary forces which would “undertake recruitment on the basis of certain common national military standards and then send those selected for training and absorption in the Army for a period of colour service before reverting (them back) to their parent para-military formations”. The committee’s suggestion of an indirect mode of recruitment and lateral entry were unconventional, but were aimed at reducing colour service, improving the age profile, and, most crucially, reducing pension costs.

A Group of Ministers (GoM) set up in 2000 examined the KRC recommendations of a lower age profile and lateral entry. It noted that “there are problems relating to aspects of retirement age and command profiles in the armed forces” and argued for a reduced number of years of colour service. Implementation of the GoM’s recommendations would have reduced the years of colour service, resulting in the retirement of many personnel without a pension, like it was before 1976, and ensured a check on the pension bill.

In 2001, the government set up a committee headed by A.V. Singh to look into the GoM’s observations on the need to improve the age, command profile and promotional avenues and lower the pension burden in the armed forces. One of its key recommendations was time-scale promotions for officers up to the rank of lieutenant colonel/equivalent rank and, the creation of nearly 2,650 senior-level posts at the level of colonel and above ranks.

The committee sought to neutralise the financial impact of the move by earmarking 50 per cent of the officer cadre for Short Service Commission (SSC) officers, thereby saving on pensions. But following successive interventions of the Supreme Court all SSC officers, male and female, have now been given permanent commission.

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